Consumer Portfolio Services, Inc.

And welcome to the Consumer Portfolio Services 2024 First Quarter Operating Results Conference Call. Today's call is being recorded. Before we begin, management has asked me to inform you that this conference call may contain forward-looking statements. Any statements made during this call that are not statements of historical facts may be deemed forward-looking statements. Statements regarding current or historical valuation of receivables because dependent on estimates of future events also have forward-looking statements. All such forward-looking statements are subject to risk that could cause actual results to differ materially from those projected. I refer you to the company's annual report filed March 15 for further clarification. The company assumes notification to update publicly any forward-looking statements, whether as a result of new information for their events or otherwise. With us here is Mr. Charles Bradley, Chief Executive Officer, Mr. Danny Barwani, Chief Financial Officer, and Mr. Mike Levin, President and Chief Operating Officer of Consumer Portfolio Services. I will now turn the call over to Mr. Bradley.

Thank you and welcome everyone to the first quarter earnings call. Generally speaking, the earnings weren't particularly great, but more importantly, it's a point where we're now turning the corner on what's been a very big struggle for most everyone in our industry, but something we've handled quite well, which is to get through the 21 and 22 production and the sort of weaker performance of those pools. But at this point, still true what we said last time, which is our company has done far better in that area than almost anyone else in our industry. So we're very proud of that. But somewhat more importantly, as I just said earlier, we've now sort of turned the corner The new paper is performing much better. We're beginning to be able to grow again. A couple of highlights, we did raise $50 million in new residual money to use for growth capital, and originations in the first quarter are beginning to really take off again. So really everything is going the right way. One other note is we renewed one of our $200 million warehouse lines. So the first quarter is really going to be sort of the jump-off point for this year and kind of getting back to where we buy very good paper, it performs very well, and we get to grow again, and hopefully at some point rather aggressively. We'll touch on all those areas a little bit more in a few minutes, but for now I'm going to turn it over to Danny to go through the financials.

Thank you, Brad. Going over some of the financial results for the first quarter, revenues were $91.7 million in Q1 versus $83.1 In the March quarter last year, that's a 10% increase. That's primarily driven by our fair value portfolio, which is now $2.8 billion, and that's yielding 11.3%. If you've been on these calls before, you're aware that that yield of 11.3% is net of credit losses or projected losses. The yield on the portfolio at the first quarter of last year was 11.2%. Moving down to expenses for the first quarter, $85.2 million versus $64.7 million last year in the first quarter. A couple of things of note under expenses, the interest expense increased to $42 million in the first quarter compared to $32.7 last year, largely due to higher rates but also in part to portfolio growth and a higher debt balance. Also included in expenses is the reversal of the loss provision on our legacy portfolio, which is accounted for under CECL. That number, that contribution for the reversal of the loss provision last year was $9 million, and this year in the first quarter it's $1.6 million. So that portfolio is going to run off over the next two or three quarters, and then we will not have much of that legacy portfolio remaining by the time we get to the end of the year. Our pre-tax earnings for the quarter, 6.6 million compared to 18.4 million in the first quarter of last year. Again, mainly due to higher interest expense and the decrease in the reversal of the loss provision on the legacy portfolio. Net income is 4.6 million for the quarter. is down from $13.8 million in the first quarter of last year. And following the same trends, diluted earnings per share is $0.19 per share in the first quarter compared to $0.54 last year. Moving to the balance sheet, our finance receivables at fair value, $2.791 billion in the first quarter is up 8% from the $2.575 in the first quarter of last year. Securitization debt balance is $2.277 billion, which is a 5% from the 2175 in the first quarter of last year. So we're seeing an 8% increase in the fair value asset and only a 5% increase in the corresponding debt. So that benefit in the lower leverage shows some strength in our balance sheet. Shareholders' equity is up to $279.1 million in the first quarter, at the end of the first quarter. That's a 22% increase from the $228.4 million in March of last year. And that's driven by, this would mark our 50th consecutive quarter of pre-tax profit. That's over 12 years of pre-tax profitability, and that's helping to boost the shareholders' equity number on the balance sheet. Moving to other important metrics, the net interest margin is $49.8 million, which is down 1% from the $50.3 million in the first quarter of last year. Core operating expenses as a percentage of the average managed portfolio is 6% in the first quarter of this year, compared to 5.7% for the first quarter of 2023. That's it for the financial numbers. I will turn the call over to Mike. Thank you, Danny.